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The National Company Law Appellate Tribunal has rejected a plea by Raheja Developers to terminate insolvency proceedings for its Raheja Shilas project in Gurugram, stating that disputes with homebuyers remain unresolved. The tribunal held that withdrawal of the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code can only be permitted after a complete settlement between parties. Over 40 homebuyers had initiated the insolvency proceedings, objecting to closure despite claims of possession being handed over. The tribunal has limited the CIRP to the specific project while allowing creditors related to other developments to pursue independent legal action.
The National Company Law Appellate Tribunal has declined a request by Raheja Developers to close the Corporate Insolvency Resolution Process (CIRP) for its Raheja Shilas project in Sector 109, Gurugram, holding that disputes raised by homebuyers remain unresolved. The appellate tribunal issued its ruling in the past week while hearing an appeal filed by Navin Raheja, chairman and managing director of the company's suspended board, challenging earlier proceedings initiated by the National Company Law Tribunal. Advertisement
The tribunal observed that an application for withdrawal of CIRP under Section 12A of the Insolvency and Bankruptcy Code can only be considered after all issues between the developer and homebuyers are resolved and a formal settlement is reached. In the present case, homebuyers who had initiated the insolvency proceedings opposed the closure, stating that several concerns remained pending with the developer.
Raheja Developers had argued that the insolvency process should be terminated as possession of flats had already been handed over to buyers and occupancy certificates had been obtained. The company further contended that buyers had completed payments and no outstanding issues remained for adjudication. However, the tribunal noted submissions from homebuyers indicating that multiple issues had not been fully addressed, preventing closure of the process at this stage.
The insolvency proceedings stem from an earlier order passed by the National Company Law Tribunal in November 2024, directing initiation of CIRP against the developer following claims of default by more than 40 flat buyers. Subsequently, the appellate tribunal had issued an interim order restricting the scope of insolvency proceedings to the Raheja Shilas (Low Rise) project, rather than the entire company.
In its final ruling, the tribunal maintained this position, clarifying that the CIRP would remain confined to the Gurugram-based project. It directed the appointed resolution professional to continue the insolvency process in accordance with law, including updating creditor claims and progressing with resolution steps.
The tribunal also clarified that financial creditors and institutions associated with other projects of the developer are not bound by the current proceedings and may pursue independent legal action through separate petitions. This ensures that insolvency proceedings related to Raheja Shilas do not affect claims linked to other developments undertaken by the company.
The ruling reinforces the position that homebuyer consent and settlement are critical prerequisites for withdrawal of insolvency proceedings in real estate cases. It also highlights the continued scrutiny of developer compliance under the Insolvency and Bankruptcy Code, particularly in projects where possession-related disputes and contractual obligations remain contested.
Source - PTI
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